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NEW YORK: Global stock benchmarks and oil prices fell sharply Tuesday after drugmaker Moderna warned existing vaccines are unlikely to be as effective against the new coronavirus variant, which spurred investors to pile into safe-haven assets such as government bonds and the yen.

“There is no world, I think, where (the effectiveness) is the same level,” Moderna’s chief executive, Stephane Bancel, told the Financial Times in an interview.

“I think it’s going to be a material drop. I just don’t know how much because we need to wait for the data. But all the scientists I’ve talked to ... are like ‘this is not going to be good,’” Bancel said.

Bancel had earlier said on CNBC that there should be more clarity on the efficacy of COVID-19 vaccines against the Omicron variant in about two weeks, but that it could take months to begin shipping a reworked vaccine designed for it.

“It’s not good news, and it’s coming from someone who should know,” said Commonwealth Bank of Australia currency strategist Joe Capurso. “Markets have reacted in exactly the way you’d expect them to.”

Gulf bourses rebound as calm returns after Omicron battering

Losses accelerated after Federal Reserve Chairman Jerome Powell told Congress that high inflation will persist until the middle of next year, leaving the central bank to “likely” discuss speeding up the tapering of the asset-buying program it introduced last year to support the economy during the pandemic.

“We’ve long maintained that the Fed is the ultimate owner of the ‘transitory’ characterization and the chair’s decision to move beyond that is a decidedly hawkish step,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets.

MSCI’s gauge of stocks across the globe shed 1.20% following broad declines in Europe and Asia. Concerns that the new variant would lead to more travel restrictions continued to hammer European travel and leisure stocks, which posted their biggest monthly fall since the initial COVID-19 lockdowns in March 2020.

In the United States, the Dow Jones Industrial Average fell 539.44 points, or 1.54%, to 34,596.5, the S&P 500 lost 68.26 points, or 1.47%, to 4,587.01 and the Nasdaq Composite dropped 231.49 points, or 1.47%, to 15,551.34.

Benchmark 10-year notes last rose 25/32 in price to yield 1.446%, from 1.529% late on Monday. Omicron worries sent the yield on 10-year German Bunds - regarded as one of the safest assets in the world - to its lowest in just over a week at -0.345%.

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